European University Institute, Florence

How do highly independent and inflation-averse central banks like the German Bundesbank affect the ability of partisan governments to generate preand postelectoral monetary and fiscal cycles? Following the explosion of research on independent central banks (ICBs), recent rational-partisan theories of political business cycles predict that ICBs simply weaken the ability of governments to generate partisan-opportunistic cycles. This paper argues that the ideological interactions between conservative, or inflation-averse, ICBs and partisanopportunistic governments that have different aversion to inflation generate distinct, yet temporally unstable, left and right cycles. Yet, singular historical events, typically linked to severe recessions, may render cycles temporally unstable. Box-JenkinsTiao analyses of Germany lend significant support to the model. The Bundesbank does contribute to generate distinct, albeit unstable, left and right preand postelectoral monetary and fiscal cycles.